TWITTER will introduce a new security system after a hoax tweet about a bombing at the White House caused widespread panic and a $136 billion stock market crash.

The Dow Jones Industrial Average briefly plunged on Tuesday afternoon (US time) after a tweet from the Associated Press's Twitter account claimed that there were two explosions in the White House and that President Barack Obama had been injured.

Markets quickly swung back after the AP said on its corporate website that its account had been hacked. The White House confirmed that there had been no incident.

It is understood the new security system is currently undergoing internal testing.

Keith Bliss, senior vice president with New York brokerage Cuttone & Co on the trading floor of the New York Stock Exchange, said he heard a slow wave of noise across the exchange floor as traders responded to the bomb tweet.

"We all started looking at it to figure out what was going on, and just as quickly there was another wave of noise after the AP denied the story," Mr Bliss said. "Just goes to show, you shouldn't have a knee-jerk reaction to anything that comes across Twitter."

The Associated Press said it was working with Twitter to investigate the issue and had disabled its other Twitter accounts following the attack.

The Syrian Electronic Army claimed responsibility for the hack but this couldn't be corroborated.

The group has taken credit for a string of Web attacks on media targets it sees as sympathetic to Syria's rebels. Among the targets the group claims to have hacked are Twitter feeds of Al-Jazeera English and the BBC.

The FBI has opened an investigation into the incident, spokesman Jenny Shearer said.

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